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How to better manage risks, rising insurance rates

Nov. 29, 2023
Insurance premiums have grown significantly over the last 10 years, and 2024 likley won't be an exception. What can fleets and contractors expect when managing their insurance expenses next year?

Insurance already is a major expense for bulk haulers, especially the smaller fleets and owner-operators, and those costs could grow next year if fleets don't take proactive measures now, experts contend. 

As freight markets dipped after the pandemic surge, many large and small carriers have struggled. Major LTL fleet Yellow, which folded over the summer, drew the most attention. But the past 18 months have been particularly hard on small fleets and owner-operators. Many small companies and independent drivers who were established during the freight boom of the pandemic era folded during the economic pressures of the last year—a triple-threat of low rates, expensive fuel, and inflation. According to FMCSA data, there have been about 75,000 operating authority revocations among small fleets and owner-operators since 2022 largely due to economic tribulations, according to Donato Monaco, president of Northland Insurance.

“Note that it’s net revocations,” he emphasized, saying that there have been more than 75,000 revocations because other, newer carriers have entered the industry. He noted that many of those drivers were likely hired by larger fleets.

The good news is that, for the drivers who have survived so far, the worst is likely over, Monaco told FleetOwner. He said for owner-operators, “2024 will not be worse … More experienced drivers have seen more ups and downs.”

Yet while freight rates were down in 2023, insurance costs are not. Nuclear verdicts continue to plague the trucking industry, and carriers pay out millions over crashes that they may not have even caused. Insurance premiums have risen in tandem with these lawsuits and settlements, Monaco said. As insurance rates have risen due to historic economic inflation, increasing nuclear verdicts increase risk for insurers, leading to social inflation, pushing those rates even higher. According to the  American Transportation Research Institute, per-mile premiums for carriers have increased by almost 50% over the last decade.

Read more at FleetOwner.com, a Bulk Transporter affiliate.